Amid rising prices and affordability concerns, some Americans have lost confidence in their ability to make their housing payment, according to a survey from the Morning Consult.
About one in six respondents, or 16.8%, said they were not confident in their ability to make their monthly housing payment in March, according to the survey. This was up from 14.3% in February and nearly doubled from last year's 8.5%.
This insecurity and a decrease in consumer spending were caused by the rising gasoline and food prices. The survey said that even higher-income adults are being affected by these increased costs.
Inflation surged 8.5% annually in March, marking a new 40-year high, according to the Bureau of Labor Statistics (BLS). This came as supply-chain constraints and the Russian invasion of Ukraine continued to push prices higher. Inflation eased slightly in April, rising 8.3% annually.
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Americans cut extra spending as prices rise
As the price of gas and various goods surged in March, consumers cut back on their nonessential purchases in order to cope with the challenges, according to Morning Consult. The cost of household expenses like house payments and groceries escalated and even stalled economic growth during the first quarter.
"U.S. consumers slashed spending on discretionary goods and services in March," the report stated. "Elevated inflation – acutely visible in sky-high gas prices – elbowed out purchases in nonessential categories that were competing for space in household budgets."
Gas spending jumped the most, surging 30% from the same time last year, amid surging gas prices, the survey said. But a growing number of drivers are cutting back on their travel time to save on driving costs. Additionally, used car purchase intentions fell from February to March as driving and car ownership grew more expensive.
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Strong labor market could spur more spending
Despite the recent pullback in spending, a strong labor market could be a hopeful sign for struggling consumers and could increase spending in the months to come.
"Some of the most stressed areas of budgets, including housing and vehicles, are seeing a moderation in demand that could flow through to pricing," the report stated.
At the time of the report, it said gas prices had begun declining, allowing for a recovery in consumer sentiment in April. "Meanwhile, strong labor market gains continue to support spending," it continued.
However, if the inflation rate continues to outpace wage growth in the coming months, consumers may need to dip into their savings. If you're looking to reduce your monthly expenses, you could consider refinancing your home loan. To see if this is the right option for you, contact Credible to speak to a mortgage expert and get all of your questions answered.
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